Google Said to Face Ultimatum From FTC in Antitrust Talks

By Sara Forden -
Nov 13, 2012

Google Inc. (GOOG) is being pressed by U.S. Federal Trade Commission Chairman Jonathan Leibowitz to offer to resolve the agency’s antitrust probe in the next few days or face a lawsuit, two people familiar with the matter said.

Google has been in discussions with the agency for about two weeks and hasn’t put any remedy proposals on the table, said the people, who declined to be identified because the negotiations are private.

For almost 20 months, the FTC has been probing whether Mountain View, California-based Google is abusing its dominance of the Internet, and it’s prepared to sue if the operator of the world’s largest search engine fails to make an acceptable proposal, the people said.

The FTC has told Google it won’t accept a resolution short of a consent decree and is prepared to take action in the next week or two, one of the people said.

“We continue to work cooperatively with the Federal Trade Commission and are happy to answer any questions they may have,” Adam Kovacevich, a spokesman for Google, said yesterday in an e-mail. Peter Kaplan, a spokesman for the FTC, declined to comment.

Specifics about what elements an FTC complaint would contain and whether it would include provisions about Google’s practices on search rankings are still under discussion within the agency, a third person familiar with the matter said.

Result Rankings

FTC investigators have been probing Google for ranking its own services higher than those of competitors, for signing exclusive agreements to provide search services to online publishers and for making it difficult for advertisers to compare data about campaigns running on rival sites by Yahoo! Inc. (YHOO) and Microsoft Corp. (MSFT)’s Bing, people familiar with the investigation have said.

A staff memo sent to the agency’s commissioners last month includes a recommendation to issue a complaint for Google’s practice of using customer reviews from other websites including Yelp Inc. (YELP) to flesh out its own services on local restaurants and other businesses, the people have said.

The staff has also recommended that the agency issue a complaint against Google for misusing patent protections to block rivals’ smartphones from coming to market, the people have said.

Complaint Types

The FTC can file a complaint in its own administrative court or with the federal courts.

Leibowitz said in a speech at an antitrust conference in Washington in September that if the agency decides to proceed in its administrative court, it can wrap up the matter more quickly than it could in federal court. No decision has been made about how to proceed, and he expects the matter to be resolved this year, he said.

A settlement or a complaint would require a majority vote of the five commissioners.

The FTC began making calls to high-tech companies to gather information for its probe in April 2011, and Google disclosed in June of that year that the FTC had begun a review of its business practices.